The agreement will combine two of America's biggest discount store, creating the biggest chains of discount retailer in the United States.

With the two companies combined, the estimated amount of their annual cost saving is approximately US$300 million in 2015.

The entire deal will have a total value of US$9.2 billion, if Family Dollar's debt will be included.

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Dollar Tree will have to pay Family Dollar US$74.50 per share, which is the company's cash-and-stock value when the market closed on Thursday.

Dollar Tree's acquisition of Family Dollar will give the former an additional 13,000 stores all over the United States and Canada. In this case, the move will put Dollar tree ahead of rival Dollar General.

Joseph Feldman, an analyst at Telsey Advisory Group, said Family Dollar CEO Howard Levine finally agreed to sell the company his father founded because of the growing competition against fellow discount retailers like Wal-Mart, Dollar Tree, and Dollar General.

Feldman said that more than anything else, it was a natural evolution.

"Family Dollar has been under some pressure for some time," he shared.

Family Dollar's stock closed in the market with a 25 percent increase to US$75.74 while Dollar Tree's shares closed with a 1.2 percent increase to US$54.7 per share.

Carl Icahn, Family Dollar's largest shareholder, said there were other buyers of Family Dollar who could have been a much better fit to acquire the company.

"We are hopeful that one or more of them will surface," Icahn said, referring to Dollar General.

With Icahn's 9.4 percent shares in Family Dollar, the investor stands to gain about US$200 million from the deal, 32 percent higher than the amount at which he bought his stake in the company. 

Tagsdollar tree, family dollar